TETRA TECHNOLOGIES INC (TTI) FY 2025 MD&A

Results of Operations

The following data should be read in conjunction with the Consolidated Financial Statements and the associated Notes contained elsewhere in this report.

Consolidated Results of Operations

(1) Percent change is not meaningful

Revenues

Consolidated revenues for 2025 increased compared to the prior year primarily due to higher activity in our Completion Fluids & Products Segment offset by lower activity in our Water & Flowback Services Segment, where revenue increased by $65.2 million and decreased $33.3 million, respectively. The increase in our Completion Fluids & Products Segment is primarily due to the completion of three TETRA Neptune wells in the Gulf of America and higher completion fluid sales volumes from international markets. The decrease in our Water & Flowback Services Segment is primarily from an overall decline in the market for our production testing and water management services in the United States. See Segment Comparisons section below for a more detailed discussion of the change in our revenues.

Impairments and other charges

Consolidated impairments and other charges increased primarily due to a $3.6 million impairment of the right of use asset for our former corporate office lease following our move to our new corporate office space in December 2025.

Gross Profit

Consolidated gross profit as a percentage of revenue increased slightly due to an increase in revenue, an increase in operating costs and the effect of changes in product mix. See Segment Comparisons section below for additional discussion.

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General and Administrative Expense

Consolidated general and administrative expenses increased during 2025 compared to the prior year primarily due to a $6.8 million increase in equity-based compensation expense and incentive compensation expense as a result of higher shareholder return and operational margin performance and a $3.6 million increase in professional expense.

Interest Expense, Net

Consolidated interest expense, net, decreased $5.1 million during 2025 due to an increase in the interest expense capitalized for our Arkansas development as well as lower interest rates on our Term Credit Agreement.

Loss on Early Extinguishment of Debt

Consolidated loss on debt extinguishment decreased during 2025 as a result of $5.5 million from non-cash unamortized finance costs expensed in connection with the repayment of our prior Term Credit Agreement in January 2024.

Other Expense, net

Consolidated other expense, net, increased during 2025 compared to the prior year other income, net primarily due to a $9.2 million decrease in gains on our investment in Kodiak Gas Services Inc. (NYSE: KGS, “Kodiak”) stock which we sold in January 2025, a $6.5 million increase in other expenses, which included the non-cash accrual of $5.9 million of operating expenses related to our former corporate office lease through the contractual lease end date in 2027 and a $4.5 million increase in foreign exchange losses. These increases were partially offset by a $2.9 million increase in unrealized gains on our investment in Standard Lithium stock due to changes in their stock price.

Provision for Income Tax

Consolidated income tax expense increased $107.2 million primarily due to the reversal of the valuation allowance during the prior year related to our United States deferred tax assets (federal and state). We establish a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of December 31, 2024, in part because in the current year we achieved three years of cumulative pretax income in the United States tax jurisdiction, management determined that there was sufficient positive evidence to conclude that it is more likely than not that additional deferred taxes of $97.5 million are realizable. We therefore reduced the valuation allowance accordingly.

Our consolidated effective tax rate for the year ended December 31, 2025 and 2024 was 84.1% and (295.3)%, respectively. The change in our effective tax rate was primarily the result of the reversal of the valuation allowance in the prior year. In addition, we elected to change the United States tax classification of our Brazilian subsidiary from a partnership to a corporation. While this tax election is expected to yield future tax benefits, the tax election resulted in recognition of approximately $6.9 million of federal deferred tax expense in the current year. Our current-year effective tax rate also increased because we did not recognize a tax benefit on the $9.5 million cumulative translation adjustment loss related to the dissolution of our Canadian subsidiary as the loss was recognized for tax purposes in a prior year when the loss was not expected to be recognized under generally accepted accounting principles. See Note 2 - “Basis of Presentation and Significant Accounting Policies” and Note 15 - “Income Taxes” in the Notes to Consolidated Financial Statements for further information on our income taxes.

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Completion Fluids & Products Segment

The Completion Fluids & Products Segment revenues increased primarily due to the successful completion of three TETRA Neptune wells in the Gulf of America, higher international brominated product sales, particularly in Europe, and higher completion fluid sales in Latin America.

The Completion Fluids & Products Segment gross profit during 2025 increased compared to the prior year due to the increase in revenues mentioned above, particularly the higher-margin Neptune fluids. Completion Fluids & Products Segment profitability in future periods will continue to be affected by the mix of its products and services, market demand for our products and services, drilling and completions activity and commodity prices.

The Completion Fluids & Products Segment operating income increased during 2025 compared to the prior year primarily due to the increase in gross profit, partially offset by a slight increase in general and administrative expenses primarily related to a $0.9 million increase in insurance cost and a $0.9 million increase in professional services.

Water & Flowback Services Segment

The Water & Flowback Services Segment revenues decreased during 2025 compared to the prior year primarily due to an overall decline in the United States market from both our production testing and water management services. These declines were partially offset by increased flowback activity from improving TETRA SandStorm and auto-drillout utilization in key markets in the United States.

The Water & Flowback Services Segment gross profit decreased due to lower revenues resulting from the decreased activity levels described above and operating cost inflation.

The Water & Flowback Services Segment operating income decreased during 2025 compared to the prior year primarily due to the decrease in gross profit and an increase in general and administrative expense primarily related to a $1.5 million increase in labor and benefits expense and a $0.5 million increase in professional services.

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Corporate Overhead

(1) Percent change is not meaningful

Corporate Overhead loss from continuing operations before income taxes increased during 2025 compared to the prior year primarily due to a $6.6 million increase in general and administrative expense from higher equity-based compensation expense, incentive compensation expense and professional fees; the non-cash accrual of $5.9 million of operating expenses related to our former corporate office lease through the expiration in 2027 and the $3.6 million impairment of the right of use asset for our former corporate office lease. These expense increases were partially offset by a $5.1 million decrease in interest expense, net, due to an increase in the interest expense capitalized for our Arkansas project as well as lower interest rates on our Term Credit Agreement, a $9.2 million decrease in gains on our investment in Kodiak stock which we sold in January 2025, and the $5.5 million loss on debt extinguishment from non-cash unamortized finance costs expensed in connection with the repayment of our prior Term Credit Agreement in January 2024.

Liquidity and Capital Resources

We believe that our capital structure allows us to meet our financial obligations and fund near-term growth as needed, despite uncertain operating conditions and financial markets. Our liquidity as of December 31, 2025 was $220.8 million consisting of $72.6 million of unrestricted cash, $75.0 million of availability under our delayed-draw term loan and $73.2 million of availability under our credit agreements. Liquidity is defined as unrestricted cash plus availability under the delayed draw from our Term Credit Agreement and availability under our revolving credit facilities. The $75.0 million delayed-draw provision of the Term Credit Agreement expired on January 12, 2026.

Our consolidated sources and uses of cash for the years ended December 31, 2025 and 2024 are as follows:

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Operating Activities

Consolidated cash flows provided by operating activities totaled $100.4 million during 2025 compared to $36.5 million during the prior year, an increase of $63.9 million. Operating cash flows increased compared to the prior year primarily driven by continued strength in our offshore completion fluids and industrial calcium chloride businesses plus a strong focus on working capital management.

Investing Activities

Total cash capital expenditures during 2025 were $80.8 million. Our Completion Fluids & Products Segment spent $59.8 million on capital expenditures during 2025, including $45.2 million on our Arkansas projects, net of reimbursement from our Evergreen Unit partner, to advance engineering and reservoir studies and to complete Phase I of our bromine processing plant, excluding capitalized interest. We also made additional investments to support strategic opportunities in the United States and Europe. Our Water & Flowback Services Segment spent $21.0 million on capital expenditures, primarily to deploy additional TETRA SandStorm units to meet increased demands and maintain, automate and upgrade its water management and flowback equipment fleet. Water & Flowback Services Segment capital expenditures also included expenditures for early production facilities in Argentina. Investing activities during 2025 also included $19.0 million in proceeds from the sale of our Kodiak stock, net of broker commissions and fees, as well as $0.6 million in proceeds from asset sales.

We have rights to the brine underlying our approximately 40,000 gross acres of brine leases in the Smackover Formation in Southwest Arkansas, including rights to the bromine, lithium and other minerals contained in the brine. Additional information on these resources is described in Part I, “Item 2. Properties” in this Annual Report. The extraction of bromine, lithium and other minerals from these brine leases will likely require a significant amount of time and capital.

Historically, a significant majority of our planned capital expenditures have been related to identified opportunities to grow and expand our existing businesses. We are also focused on enhancing shareholder value by capitalizing on our key mineral assets, brine mineral extraction expertise, and deep chemistry competency to expand our offerings into the low carbon energy markets. However, we continue to review all capital expenditure plans carefully in an effort to conserve cash. If the forecasted demand for our products and services increases or decreases, or we proceed with development of brine resources in Arkansas, the amount of planned expenditures on growth and expansion may be adjusted.

Financing Activities

During the year ended December 31, 2025, consolidated net cash used in financing activities was $5.4 million, consisting of $4.7 million of payments of finance lease obligations, $1.3 million final payment for a seller-financed plant purchase in Latin America and $0.4 million borrowings offset by $0.4 million of repayments of our revolving credit facility. Financing cash flows also included $3.9 million in proceeds from exercise of stock options, partially offset by $3.2 million for payroll taxes paid upon vesting of equity-based compensation awards. We may supplement our existing cash balances and cash flow from operating activities with short-term borrowings, long-term borrowings, issuances of equity and debt securities, and other sources of capital.

Term Credit Agreement. On January 12, 2024, the Company entered into a definitive agreement for a $265.0 million credit facility consisting of a $190.0 million funded term loan and a $75.0 million delayed-draw term loan (collectively the “Term Credit Agreement”) that refinanced the Company’s prior Term Credit Agreement and provided capital to advance the Company’s Arkansas bromine processing project. The $75.0 million delayed-draw provision of the term loan expired on January 12, 2026. The maturity date of the Term Credit Agreement is January 1, 2030.

Asset-Based Credit Agreement. On May 13, 2024, we entered into an amendment (the ABL Amendment”) to the Asset-Based Lending agreement dated September 10,2018 (as amended, the “ABL Credit Agreement). In connection with the ABL Amendment, Bank of America, N.A. became successor administrative agent to JPMorgan

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Chase Bank, N.A. approximately $0.9 million of fees were incurred in connection with the ABL Amendment, which were deferred and will be amortized over the term of the ABL Credit Agreement.

The amended ABL Credit Agreement provides, with certain restrictions, for a senior secured revolving credit facility of up to $100.0 million with a $25.0 million accordion. The credit facility is subject to a borrowing base determined monthly by reference to the value of inventory and accounts receivable, and includes a sublimit of $20.0 million for letters of credit, and a swingline loan sublimit of $11.5 million.

The ABL Credit Agreement may be used for working capital needs, capital expenditures and other general corporate purposes. The amounts we may borrow under the ABL Credit Agreement are derived from our accounts receivable, certain accrued receivables and certain inventory. Changes in demand for our products and services have an impact on our eligible accounts receivable, accrued receivables and the value of our inventory, which could result in significant changes to our borrowing base and therefore our availability under our ABL Credit Agreement. The ABL Credit Agreement is scheduled to mature on May 13, 2029. As of December 31, 2025, we had no balance outstanding under the ABL Credit Agreement and, subject to compliance with the covenants, borrowing base, and other provisions of the agreement that may limit borrowings, we had availability of $67.7 million under the ABL Credit Agreement.

Swedish Credit Facility. The Company has a revolving credit facility for seasonal working capital needs of subsidiaries in Sweden and Finland (“Swedish Credit Facility”). As of December 31, 2025, we had no balance outstanding and availability of approximately $5.4 million under the Swedish Credit Facility. During each year, all outstanding loans under the Swedish Credit Facility must be repaid for at least 30 consecutive days. Borrowings bear interest at a rate of 3.0% per annum. The Swedish Credit Facility expires on December 31, 2026 and the Company intends to renew it annually.

Finland Credit Agreement. The Company has an agreement guaranteed by certain accounts receivable and inventory in Finland (“Finland Credit Agreement”). As of December 31, 2025, we had $1.6 million of letters of credit outstanding against the Finland Credit Agreement. The Finland Credit Agreement has been renewed by the Company through December 31, 2026.

As of December 31, 2025, we are in compliance with all covenants of our debt agreements. See Note 10 - “Long-Term Debt and Other Borrowings.”

Other Sources and Uses of Cash

In May 2025, we filed a universal shelf Registration Statement on Form S-3 with the SEC, which was declared effective by the SEC. Pursuant to this registration statement, we have the ability to sell debt or equity securities in one or more public offerings up to an aggregate public offering price of $400 million. This shelf registration statement currently provides us additional flexibility with regards to potential financing that we may undertake when market conditions permit or our financial condition may require.

In addition to the aforementioned credit facilities and senior notes, we fund our short-term liquidity requirements from cash generated by our operations and from short-term vendor financing. In addition, as of December 31, 2025, the market value of our equity holdings of Standard Lithium was $3.6 million with no holding restrictions on our ability to monetize our investments. Should additional capital be required, the ability to raise such capital through the issuance of additional debt or equity securities may be limited by instability or volatility in the capital markets at the times we need to access capital may affect the cost of capital and the ability to raise capital for an indeterminable length of time. If it is necessary to issue additional equity to fund our capital needs, additional dilution of our common stockholders will occur. We periodically evaluate engaging in strategic transactions and may consider divesting non-core assets where our evaluation suggests such transaction is in the best interest of our business. In challenging economic environments, we may experience increased delays and failures by customers to pay our invoices. We could experience delayed customer payments and payment defaults associated with customer liquidity issues and bankruptcies. If our customers delay paying or fail to pay us a significant amount of our outstanding receivables, it could have an adverse effect on our liquidity. An increase of unpaid receivables would also negatively affect our borrowing availability under the ABL Credit Agreement and Swedish Credit Facility.

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Leases

We have operating leases for some of our transportation equipment, office space, warehouse space, operating locations, and machinery and equipment, as well as a sales-type lease and subleases for certain facilities. See Note 2 - “Basis of Presentation and Significant Accounting Policies” and Note 7 - “Leases” in the Notes to Consolidated Financial Statements for further information on our lease obligations.

Asset Retirement Obligations

We operate facilities in various U.S. and foreign locations that are used in the manufacture, storage, and sale of our products, inventories, and equipment. We are required to take certain actions in connection with the retirement of these assets.

Product Purchase Obligations

In the normal course of our Completion Fluids & Products Segment operations, we enter into supply agreements with certain manufacturers of various raw materials and finished products. For information on product purchase obligations, see - Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements.

Off Balance Sheet Arrangements

As of December 31, 2025, we do not have any off balance sheet arrangements that may have a current or future material effect on our consolidated financial condition or results of operations.

Litigation

For information regarding litigation, including contingencies of discontinued operations, see Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements.

Critical Accounting Policies and Estimates

This discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements. We prepared these financial statements in conformity with U.S. GAAP. In preparing our consolidated financial statements, we make assumptions, estimates, and judgments that affect the amounts reported. We base these on historical experience, available information, and various other assumptions that we believe are reasonable. Our assumptions, estimates, and judgments may change as new events occur, as new information is acquired, and as changes in our operating environments are encountered. Actual results are likely to differ from our current estimates, and those differences may be material.

An accounting policy is considered critical if it is both material to the presentation of the financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on the financial condition or results of operations. Accounting estimates and assumptions may become critical when they are material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and that have a material impact on financial condition or operating performance.

Critical accounting estimates are estimates that require us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made and if different estimates that we reasonably could have used in the current period, or changes in the accounting estimate that are reasonably likely occur from period to period, have a material impact on the presentation of our financial condition, changes in financial condition or results of operations. We believe that of our significant accounting policies described in Note 2 - Basis of Presentation and Significant Accounting Policies in Part II, Item 8 of this Annual Report on Form 10-K, the critical accounting estimates, assumptions, and judgments that have the most significant impact on our consolidated financial statements are described below.

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Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis amounts. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. A portion of the carrying value of certain deferred tax assets are subject to a valuation allowance.

Loss Contingencies

We and certain of our subsidiaries are involved, in the normal course of business, in lawsuits, claims and other legal proceedings and audits. We accrue reserves for these matters when we believe it is probable that a liability has been incurred and the liability can be reasonably estimated. In addition, we disclose exposure to certain losses in excess of the amount recorded on the balance sheet for these matters if it is reasonably possible that an additional material loss may be incurred. We review such loss contingencies on an ongoing basis. Loss contingencies are based on judgments made by management with respect to the likely outcome of these matters and are adjusted as appropriate. Management’s judgments could change based on new information, changes in, or interpretations of, laws or regulations, changes in management’s plans or intentions, opinions regarding the outcome of legal proceedings or other factors. See Note 11 - Commitments and Contingencies - Litigation and Contingencies of Discontinued Operations in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.